New Welsh tax powers mean home-buyers will pay less
WALES will get its own taxes for the first time in 800 years after the government announced the replacement of stamp duty on house sales.
Welsh Government finance secretary Professor Mark Drakeford has unveiled the new plans as part of the Welsh budget for the next two years that could see people in Wales pay less for houses.
From April 2018, the country will be responsible for raising a proportion of its own revenue from two new taxes – a land transaction tax and landfill disposals tax – to spend on public services.
The land transaction tax will replace stamp duty – the charge people have to pay when they buy a home as percentage of the house value.
In Wales, the amount house-buyers pay will be slashed to zero if the property is worth less than £150,000. At the moment the zero rate stamp duty is only on homes under £125,000.
All buyers of residential properties costing up to £400,000 will pay the same or less tax than under stamp duty tax, while the average homebuyer will pay nearly £500 less tax than under stamp duty land tax.
People buying properties worth more than £400,000 will have to pay at least 7.5% duty on the house – under stamp duty rules a similar house would only attract a charge of 5%.
Professor Drakeford said: “This is a new budget for Wales and marks another important milestone in our devolution journey as we prepare to take on new tax and borrowing powers from April.
“Rather than just setting out our revenue and capital spending priorities, this draft budget is the first to outline the decisions we have taken to raise a proportion of our own revenue to support public services.
“Using these new powers, we have been able to introduce progressive and innovative tax plans, which will make a real difference to people’s lives, change behaviours and deliver improvements to all our communities.”
Wales will have the lowest starting rate of tax for the purchase of business premises in the UK.
All businesses buying premises up to the value of £1.1m in Wales will either pay no tax or up to £1,000 less tax than under stamp duty land tax.
The government also published a list of ideas for new taxes to be considered for the future. Each of these will be developed further over the course of this year and one new tax idea will be proposed to the UK Government in 2018 to test the Wales Act powers.
The four shortlisted ideas are: A levy to support social care, a vacant land tax, a disposable plastic tax and a tourism tax.